Subject: File No. 4-465
From: Jonathan Phelan, CFA, CFP

January 19, 2012

I am a former Securities Compliance Examiner with the SEC. I have a bachelor's degree in finance and hold both the Chartered Financial Analyst and Certified Financial Planner designations. I am now an investment adviser registered with the State of Michigan.

I strongly believe that financial literacy should begin during youth. I have found that it is typically difficult to change financial behavior of individuals once they are already into their careers. The strategies for what it takes to be a smart consumer of financial products should be taught as a mandatory class in high school. I would also strongly recommend a mandatory 1 or 2 credit class for college graduates.

There are so many subjects taught in schools that neither prepare a child for college or a career. Personal finance is something that will affect every single person in the real world, yet there is no nationwide mandate for such a class and only a couple states have mandatory classes dedicated to financial education. I have been spreading this message to anyone who would listen since my time at the SEC. I went so far as to create a week-by-week outline of topics that would be covered during a one semester class. I believe that mandating a well constructed class dedicated to financial literacy for every student in the country is the only way to break the cycle of booms and busts in the economy fed by the expenditures or "investments" of unsophisticated financial consumers.

Furthermore, I have some thoughts on the topic of disclosures to be made to consumers of financial products and services. The first key is that the disclosure document needs to be short, two pages at most. The document should briefly and clearly state whether or not you are buying a product (mutual fund or insurance product for a commission) or a service (advice for a fee). The document should clearly indicate all possible compensation that could be received by the financial intermediary including all types of commissions (front end, trails, CDSCs/CDSLs), asset based or flat fees, as well as any additional non-commission "revenue-sharing" or similar payments from product companies to intermediaries. Such compensation should be expressed in both percentage of assets invested and actual dollars. The disclosure document should quickly state with a "yes" or "no" answer, whether the financial representative has any past industry violations or settlements. The disclosure statement would include a statement as to whether the financial representative is responsible for monitoring and providing guidance to the client on an on-going basis or is it a one-time engagement. Finally, the disclosure statement should also include a "yes" or "no" response as to whether the financial representative is acting as a fiduciary for the transaction with the SEC definition of a fiduciary provided.